Wednesday, February 11, 2009

Sir James takes the long walk

We are in the midst of the greatest banking crisis in over a century, and so far, only a handful of people have been held accountable. A couple of CEOs have resigned, but in most cases, retirement was close.

Today was different. We had the first significant departure. Sir James Crosby, the former head of HBOS and deputy chairman of the FSA, got the big heave.

However, Crosby was cut loose over an issue that happened four years ago. He fired HBOS's head of regulatory risk, Paul Moore, for raising concerns about unsustainable growth.

This is just too weird. If Sir James did something wrong, he should have been fired shortly after the mistake had been revealed. If he unfairly dismissed Mr. Moore, he should have been removed when this became apparent. If he mismanaged risk at HBOS, then the FSA should have dealt with him during the heady days of double digit credit growth. But at the time, none of these serious errors amounted to a firing. Sir James was given a free pass, which for largely political reasons expired today.

Sir James got his long overdue comeuppance after an MP raises the issue at yesterday's treasury committee meeting. Cameron asks a question today, and Brown public ally abandons Sir James. A few minutes later, it is all over.

In this country, we have a strange habit of firing the right people for the wrong reasons.